Project 2: Organizing Human Capital Business Strategy Analysis Assignment
sunshinelolopop
Project1.docx
9
June 16th, 2019
BGMT 364
Introduction:
The company is renowned for the delivery of the best natural products. The demand for these products is not limited to the US or Europe but is also high in China. Due to this, the company has decided to expand its product in these regions. Along with the expansion of their primary business, they have also introduced a whole new product range for infants, including an interest in pursuing an infant formula.
The external and internal factors of this new product line are analyzed so that favorable/unfavorable conditions that the company may face while introducing their new infant food line are examined. The paper presents a comprehensive view of SWOT analysis, PESTEL analysis, and Porter’s Five Forces analysis. All these analyses are summed up into goals and objectives that will be used in introducing this new product line.
PESTEL analysis:
Political
Currently, the company is free from any political barriers as it is successfully doing business in six countries. However, expanding the business in China, which is known as the biggest economy, can create a barrier for them. The changing regulations related to food standards and market actions may be a barrier for this new product line (Candela, 2019). The stability of the government in China also questions the risk as a part of the internationalization process. Also, the impending tariffs imposed by President Trump could hurt Great Start’s business in China. According to CNBC, “the Chinese authorities appear to be making operations more difficult for some companies.” (CNBC, May 2019) There has been decreased traffic and more inspections.
Economic:
The economic factor is quite favorable for this new product if they introduce it to new markets like China. However, the changing inflation rate, income level of people, and economic growth rate will affect the buying of these products. These are the factors that influence the buying power of the population. If these factors are under control, then there are many chances that this product sale will outperform.
Furthermore, the changes in consumer budget give rise to cost-conscious consumers. Here, the increase in prices of raw material due to changes in the inflation rate also affect the prices of products. A potentially concerning but advantageous thing to note is China’s One Belt, One Road Initiative. According to the Council of Foreign Relations, the new Silk Road would stretch from East Asia to Europe. “Some analysts see the project as an unsettling extension of China’s rising power.” (CFR, 2019) This Silk Road could make shipping our products more cost-effective, considering Great Start has locations in Switzerland, Belgium, and the Netherlands but considering the tariffs that affect American businesses in China could be potentially damaging.
Social:
The social factors are favorable for the company because the consumer attitude has changed as they prefer healthier products for their family, and this product promises to deliver a healthy life for their infants. This product is available for everyone regardless of the difference in cultural settings. Under the social factors, it is essential to understand consumer behavior so that a personal approach to marketing can be ensured. Thus, the consumers view the firm as an agency that empowers their wider external environment.
Technological:
The technology environment is supportive of the company because the incorporation of the research and development department within the company helps them develop products that are demanded by consumers. Also, the markets where the company operates are renowned for their technological impact on the world. Therefore, this technological advancement is supportive of the business operation of developing an infant food line.
Environmental:
The environmental concerns are high-level all over the world due to the high rate of global warming (Candela, 2019). So the company always tries to incorporate sustainable environmental practices that provide the least damage to the environment. Furthermore, the Eco-sustainable commitments of the company towards India and Brazil, where these natural pharmaceutical ingredients are produced, promotes the company’s commitment towards the triple bottom line.
Legal:
The company must develop this new product as per the legal acts of supplements similar to what the company is already doing. All the companies who manufacture this supplement product are free from any lawsuit due to their strong adherence to these laws. The company is already in this product line and knows all the legal implications related to this new infant product line; therefore, the legal factors are also comfortable for this new product line.
SWOT Analysis:
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Strength Strength according to Lumen Candela “internal characteristics of the business that give it an advantage over competitors.” (Lumen Candale, 2019) The current strengths of the company are listed below: 1. Competitive advantage is the greatest strength of the company that outstands them against others. The longevity of Great Start has made it a well-known brand which gives the company a competitive advantage over their competition. This competitive edge is the reason for their immense growth. It is the strength of the company because they continuously focus on improving the health of people and try to solve their health issues with natural products. They are not focusing on only one age group but presented a diversified range of products for people of different age groups.
2. Great Start Nutrition also focused on customer need, and as per the requirement and demand of customers, they innovate new products that help them in curing their various health issues.
3. Great Start Nutrition’s product range is not limited to medicine protein bars, vitamins, and food supplements, and other items are manufactured. Hence, their whole product range provides quality products for people.
4. These natural and better-tasting products differentiate them from others. This is the reason why they are popular among consumers.
5. Now, they are targeting infants and introducing a whole new range of infant product line that is purely made from natural products. In their current competition hardly any who offers such a variety of natural infant products. This opening will give them a leg up against the current competition.
6. Moreover, the research and development department of the company is their greatest strength. Due to extensive research, they can introduce new products. |
Weakness 1. Currently, the gross sales of the company are $45 billion, but their substantial investment in technology and raw material makes the investment cost high. This will automatically lead to high prices of products. Under the financial crises, or high inflation in China and low economic growth, the buying power of consumers is less. Thus, the customers will not be able to buy these high priced products. Therefore, after carefully analyzing the financial condition of the company and future economic perspective, they should invest in research and development.
2. As the company is operating in different countries and nutritional standards of each country are different, manufacturing a product as per each market’s dietary rules is difficult. Following China’s strict tariffs and business, regulations can make operating and generating revenue difficult.
3. The company is in intense competition with many multinationals like Nature’s Bounty, whose products are penetrating the market due to effective marketing strategies. The company has no marketing plan that will introduce its new product to the market. Thus, marketing is the weakest point of the company on which they have to work.
4. Static sales in the domestic market are also a weakness because if their sales are not increasing in the local market and the management of the company fails to increase sales; then it is difficult for them to promote sales in other countries. |
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Opportunities There are a lot of opportunities for the company that they can explore. Some of the opportunities are listed below:
1. The decisive external factor of the company is favorable for growth or expansion that they can use to overcome their weaknesses.
2. They can incorporate more technology and apply advanced research techniques in the manufacturing of natural supplements. Through innovative research techniques, they can explore more natural ingredients that they can add in their products.
3. New ideas and innovation lead to the development of new products, like the infant product line. This allows them to keep their existing customers and grow with more customers as well.
4. The expansion of the business into China is an excellent opportunity for them where they can take advantage of these economically strong markets.
5. The world’s population is increasing day by day, as is consumer interest in natural products due to health consciousness. This allows them to serve this highly populated market.
6. As all the competitors are manufacturing infant products from processed food, this is the only company producing natural infant products. Thus, it allows them to meet the needs of most of the people and increase their sale.
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Threats The external and internal threats that the company face is summarized in the following points: 1. The intense competition and presence of multinationals in more markets are the main threats as the company is in direct competition with them.
2. The buyer has greater power due to the presence of more choices and country loyalty. They might opt for a Chinese brand or something local vs. Great Start nutrition.
3. Due to the change in economic condition, there is a change in prices due to which the price of raw material varies. This variability leads to a change in the price of the product. Sometimes, this rapid change in price disturbs the profit of the company. Hence the CSR initiatives of the company are disturbed.
4. The dynamics in the external environment affects the decision making of the company and also heightens the competition.
5. Rapid technological change and rapid advancement drive innovation-related challenges within the company.
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Porter’s Five Forces Analysis:
Threats of new entrants:
There is no legal barrier applied to the new entrant. Hence, the threat of new entrants is high because of great innovation and new ways of doing business make way for opportunities to enter this industry. Due to globalization, the door for new companies all over the world is open so that they can invest in this industry. Competition is created due to the new value proposition to customers, lower pricing strategy, and reducing cost, which is some of the strategies that new entrants applied for penetration into this market. As the company has operated for more than 50 years, they know how to tackle these challenges. Practical barriers are also adopted by the company to safeguard its competitive edge.
Bargaining power of suppliers.
There are several suppliers of the company from which they buy the product. Some raw material they also imported from different parts of the world, as there are limited suppliers of raw material. Hence, Great Start is in a dominant position that decreases the profit margins of the company. These suppliers use their negotiation power to charge high prices from the companies. Therefore, the cost of raw material is high. These suppliers impact the overall profitability of the company.
Bargaining power of buyers.
Buyers always want to purchase the best products at a low price, and they always demand a lot. It affects the profitability of the company in the long run. Due to the presence of competitors, the company cannot charge their own desired prices, but they have to set the prices as per the prices of their competitors. The extent to which the customers are more powerful, the greater will be their bargaining power. Hence, they have a higher ability to seek offers and discounts. Due to the growing tension in China, buyers may consider buying from local Chinese brands. (CNBC, 2019)
The threat of substitute product:
The industry profitability suffers when the new products and services meet a similar customer need in different ways (Candela, 2019). For example, infant products are already offered by competitors. Therefore, the threat of substitution is high. However, it is also a fact that competitors made their product from processed food, and Great Start made their product from natural ingredients. This is the difference between the substitute products and company products. This differentiation between the two available products brings the graph of the high threat of substitute to normal because of the natural ingredients that are used in the infant product line.
Rivalry among the existing companies:
Rivalry among the existing companies is present, but this rivalry is not so intense as to put the prices of products down in the overall industry, so the whole industry suffers. This intense competition does not toll over the long term profitability of the organization. Great Start doesn’t need to worry about their competition due to differentiation. According to Lumen Candela, differentiation is creating a unique service or product and is strongly associated with an organization’s brand. Great Start Nutrition will be breaking into the infant formula and will have a competitive edge against their current competition. (Lumen Candela, n.d.)
Goals and Objectives;
Goal 1:
Offers healthier and tastier choices for infants.
Objectives:
• The company aims to launch such food and beverages for infants that are made from natural products. These products are primarily for mothers-to-be, new mothers, and infants, as well as children.
• The company aims to reduce sugar, saturated fat, and sodium from these new products.
• These new infant products are enriched with vegetables, grains, luxurious fiber, nuts, and seeds that are added in beverages and foods.
• The company’s main objective to simplify the ingredients list that is used in new product range and no artificial flavor and color is added in it.
• These products are made under micronutrients fortification.
Most often, the products that are for infants are not healthier due to the integration of artificial ingredients. The taste of these products is also unpleasant for the infants, causing them to resist. Hence, the goal of the company is to introduce such a product range for infants that are healthier and tasty.
Goal 2:
Inspire people to live a healthy life and feed their infants and themselves with nutritional products.
Objective:
• The main objective of the company is to explain and apply the nutritional information on the packaging at points of sale.
• Proper guidance on portions of products is given.
• Healthy cooking, lifestyle, and eating for infants are also promoted through marketing efforts.
• Empower the parents to foster healthy eating for their infants.
• The company aims to provide breastfeeding substitute products for those infants who cannot have this. Nevertheless, the company supports the ideals behind breastfeeding first.
• Promotes a healthier food option for infants through a wide range of natural products.
Nutritional products are s need for every one of us. Not only do adults need it, but it is imperative for infants as well. Therefore, the company aims to provide nutritional products that inspire and promote a healthy lifestyle. The same goal is promoted in the set objective of the company that they intend to achieve through this infant product line.
Goal 3:
Shares build and apply nutritional knowledge for strong growth of infants.
Objectives:
• The company aims to deliver complete knowledge to new mothers.
• Knowledge is aimed to be delivered to mothers within the first 1000 days of infancy
• The company promotes healthy products and ensures that these products are made from natural ingredients. It also provides personalized nutrition, as well.
However, merely providing a healthy nutritional product to customers is not enough. The goal of the company is to share, build, and apply the nutritional knowledge for the better development of infants that are required in their first 1000 days of life. Through this goal, the company aims to provide complete knowledge about nutrition to mothers, so that they can know the importance of this infant diet for their children.
Goal 4:
Makes infant formula that is affordable and accessible.
Objectives:
• The company aims to take collective action and also address nutritional gaps.
• Deliver such product that reduces the deficiency level.
• Launching an organic version of products as per the age of the infant.
The price range of infant products is always high because of artificial products used in manufacturing, but the goal of the company is to make it accessible and affordable for everyone. Therefore, they aim to deliver this product range at affordable prices. Through this product, the nutritional gaps and deficiency are appropriately addressed.
Step 6: Competitive Analysis
In the vitamin and food supplements industry, the three major competitors of the company are Amway, Pfizer, and Treerly Nature’s Bounty. The products of Amway include snacks and multivitamins. For example, their Double X supplements feature superfood organic beet powder, and superfood organic matcha powder is in its premium products. Treely Nature’s Bounty is a corporation that manufactures gummies, herbs, and multivitamins for different needs and age groups.
The strengths of Nature’s Bounty are its worldwide presence and high demand, along with affordable prices. These features make their multivitamins prominent. The target market of Nature’s Bounty is not the developed countries, but in underdeveloped countries where their products are equally famous and demand is also high.
From the competitor analysis, it is analyzed that although the three companies are the leading competitors and their products are present all over the world, the products of Great Start Nutrition for infants outperform them. This is due to the natural ingredients that make their product more prominent among others. In competitors’ products, different vitamins and supplements are added that gives an artificial flavor, but the products of Great Start Nutrition are 100% original, with no synthetic supplements or color added. Therefore, this infant formula will be better for the company that makes this product and as famous as their other products. Due to workshops run by divisions, consumer preferences are known and can be used for current and future projects.
References
Candela, L. (2019, 1 1). Internal Inputs to Strategy. Retrieved from lumenlearning.com: https://courses.lumenlearning.com/boundless-management/chapter/internal-inputs-to-strategy/
Candela, L. (2019, 1 1). External Inputs to Strategy. Retrieved from lumenlearning.com: https://courses.lumenlearning.com/boundless-management/chapter/external-inputs-to-strategy/
Chengevelyn. (2019, May 22). American businesses in China: Tariffs are hurting us. Retrieved June 15, 2019, from https://www.cnbc.com/2019/05/22/trump-tariff-increases-hurting-us-businesses-in-china-survey-says.html
China's Massive Belt and Road Initiative. (n.d.). Retrieved June 15, 2019, from https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative
